Andre LaBarbera, of Dix Hills, New York, a stockbroker formerly registered with Newport Coast Securities, has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity per a FINRA Extended Hearing Panel Decision containing findings that LaBarbera effected unsuitable trades and churned customer accounts. Department of Enforcement v. LaBarbera, No. 2012030564701 (Oct. 17, 2016).
According to the Decision, LaBarbera traded in an unsuitable manner in the account of customer DB, who held accounts with Newport Coast Securities between May of 2012 and July of 2012. Apparently, throughout this time frame, DB’s account was subject to $1,400,000.00 in purchases and $1,300,000.00 in sales. FINRA stated that because of LaBarbera’s trading, DB had a cost/equity percentage of 142.07% and a 39.98 annual turnover rate. DB reportedly experienced at least $50,000.00 in total costs and sustained an estimated $34,000.00 loss.
The Decision also stated that LaBarbera traded unsuitably in the account of customer CA, who held accounts with Newport Coast Securities between June of 2010 and May of 2012. Apparently, CA’s account was subject to purchases estimated at $721,000.00 and sales of nearly $667,000.00. CA apparently had a cost/equity percentage of 67.23% and an annualized 16.69 turnover rate. FINRA reported that CA’s costs accumulated to nearly $29,000.00 in total, and CA sustained an estimated $50,000.00 in losses.
The Decision also indicated that LaBarbera made faulty recommendations in the account of customer RG, who held his account with Newport Coast Securities between January of 2011 and May of 2012. Apparently, RB was subject to purchases exceeding $173,000.00 and sales exceeding $160,000.00. FINRA stated that RB experienced a cost/equity percentage of 74.35% and an annual 18.02 turnover rate. The Decision stated that RB incurred costs estimated at $7,200.00 and experienced nearly $16,000.00 in losses.
The Decision stated that LaBarbera effected trades in customer accounts in a manner which was inconsistent and excessive when considering the investment objectives and financial circumstances of each customer. The Decision revealed that customers faced cost/equity percentages ranging from 67.23% to 142.07%. Further, customers experienced turnover rates ranging from 16.69 to 39.98.
FINRA determined that LaBarbera’s trading was incapable of being suitable for any customers. Further, the Decision stated that despite such customers authorizing such aggressive active trading through the signing of account documents and letters, it did not justify LaBarbera’s excessive trading. FINRA deemed LaBarbera’s conduct of unsuitable trading to be violative of FINRA Rules 2010 and 2111, NASD Rules 2110 and 2310, and IM-2310-2.
Further, FINRA stated that LaBarbera’s trading was indicative of churning. Particularly, the benefits afforded to LaBarbera from such trading reportedly stripped away the customer’s expected returns. FINRA found that LaBarbera’s trading was designed to benefit himself without consideration of how customers would benefit. FINRA found that LaBarbera’s reckless and willful disregard of the customers constituted violations of Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, FINRA Rules 2010 and 2020, and NASD Rules 2110 and 2120.
Further, FINRA found that LaBarbera made qualitatively unsuitable investment recommendations to customers DB and DR regarding exchange traded fund investments and exchange traded notes. The Decision indicated that some of these exchanged traded funds that LaBarbera recommended were in inverse and leveraged exchange traded funds. Apparently, LaBarbera made the recommendation for DR to make twenty-five purchases in exchange traded notes between March of 2009 and August of 2010. These funds; however, were meant for short term trading and investors that were highly sophisticated.
Apparently, LaBarbera, when questioned by FINRA as to the suitability of such products for DR, provided no legitimate explanation for making purchases of exchanged traded funds in the account of DR. LaBarbera also made recommendations and effected purchases of three VXX exchanged traded notes in DB’s account from December of 2011 to February of 2012, which equated to at least seventy percent of DB’s account equity upon purchasing. LaBarbera apparently failed to convince FINRA that he had any basis for concluding that VXX was suitable for DB.
FINRA stated that LaBarbera did not demonstrate that he performed any analysis for suitability of the exchange traded funds, or was capable of such. LaBarbera apparently did not even comprehend what exchange traded funds were, and acknowledged that such products were not suitable for a customer who he made the recommendations to. LaBarbera’s conduct in this regard was found by FINRA to be violative of FINRA Rule 2010, as well as NASD Rules 2110 and 2310.
FINRA Public Disclosure reveals that LaBarbera has been subject to six incidents regarding misconduct, four of which involve customer initiated arbitration claims. Particularly, on April 23, 1996, a customer initiated investment related arbitration claim involving LaBarbera’s conduct was resolved for $25,000.00 in damages based upon allegations against LaBarbera of making fraudulent misrepresentations and omissions regarding investments to such customers, and breaching his fiduciary and contractual duties.
On May 27, 1997, a customer initiated arbitration claim involving LaBarbera’s conduct was settled for $25,000.00 in damages based upon allegations that LaBarbera made omissions and misrepresentations to the customer concerning investments, and breached his contractual obligations with the customer.
On June 13, 2009, a customer initiated arbitration claim involving LaBarbera’s conduct was settled for $160,000.00 in damages based upon allegations that LaBarbera made misrepresentations to the customer concerning investments. On August 21, 2013, a customer initiated investment related arbitration claim involving LaBarbera’s conduct was settled for $2,500.00 in damages based upon allegations against LaBarbera of making misrepresentations concerning investments.
Since 1990, LaBarbera has been associated with ten different broker dealers, two of which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct. After termination from Newport Coast Securities in August of 2012, he became registered with IFS Securities from July of 2012 through December of 2012. LaBarbara has been registered with Titus Rockefeller, LLC since January of 2013.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
